BSP expects continued volatility in global markets

MANILA, Philippines–Monetary officials remain on guard against any pressure on the peso as financial markets feel the shockwaves from conflicting moves by central banks in advanced economies.

These actions all aim to strengthen advanced countries, which are also among the Philippines’ biggest trading partners. But in the short term, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the divergence of policies might hurt smaller markets.

“We will continue to watch the actions of policymakers in the advanced economies as their divergence could create near-term volatility in our own domestic financial markets,” he told reporters on Monday.

His comment followed an unexpected move last week by the Bank of Japan to expand its massive stimulus spending to further spur Asia’s second-largest economy. The week prior, the US Federal Reserve announced a halt to its own massive stimulus program—a precursor to an eventual move to raise interest rates.

Divergence in policy directions among advanced economies is a sign of imbalance in the global recovery from the 2008 global financial crisis that started in the United States. Europe, for instance, is still struggling with high unemployment and massive levels of government debt.